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The UK’s Payment Systems Regulator (PSR) has greenlit plans to enhance safeguards for victims of authorised push payments (APP) fraud, set to be effective from October 2024.
Termed a “step-change” in fraud protection, the initiative aims to reimburse the majority of funds lost to APP fraud, with a capped reimbursement limit of £415,000. Payment firms, as senders, may choose to impose a claim excess of up to £100 at their discretion. Notably, this doesn’t encompass claims filed by vulnerable consumers.
Under the new regulations, reimbursement costs will be evenly divided (50:50) between sending and receiving firms, introducing incentives at the receiving end for the first time.
APP fraud has emerged as a prominent threat in the UK, resulting in losses nearing £500 million in the past year. Advocacy from consumer groups and policymakers has urged banks to address this escalating issue and expedite the reimbursement process for innocent victims.
The updated rules pledge that the majority of APP fraud victims will receive reimbursement within five business days, with added protections extended to vulnerable customers.
While underscoring that consumers must remain cautious during payments, the PSR highlights that the burden lies with banks to demonstrate they acted without gross negligence.
Chris Hemsley, Managing Director at PSR, emphasizes that the approach encourages banks and payment firms to proactively prevent APP fraud, ensuring consistent protection for victims.
A spokesperson from Pay.UK welcomes the PSR’s finalized legal instruments for the APP reimbursement regime, highlighting their commitment to implementing the regime next year as directed by the PSR.
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